Inducement Requires Knowledge of The Patent and Culpable Mens Rea

PatentlyO2006017DSU Medical v. JMS (Fed. Cir. 2006) (en banc)

The interesting portion of this opinion rests in Section III.B, where the CAFC convened an en banc panel to clarify that “inducement” of infringement requires intent to induce actual infringement, which necessarily requires knowledge of the patent.

Section 271(b) of the Patent Act spells out the tort: “Whoever actively induces infringement of a patent shall be liable as an infringer.”

Applying the language of Grokster, the CAFC clarified that in patent cases, “the intent requirement for inducement requires more than just intent to cause the acts that produce direct infringement. . . . [I]nducement requires evidence of culpable conduct, directed to encouraging another’s infringement.”  According to the court, this culpable conduct requires knowledge of the patent and an intent to induce infringement of the patent.

As Kevin Noonan has noted, the distinction in this case is that “there was evidence (an opinion of counsel and testimony from corporate officials) that the defendant believed that the accused behavior was not infringement. Thus, CAFC said the evidence supported the trial court’s finding that the defendant did not intend to induce infringement, which was the mens rea required for liability under 35 USC 271(b).”

22 thoughts on “Inducement Requires Knowledge of The Patent and Culpable Mens Rea

  1. 22

    I’d like to make two points. First, DSU Medical v. JMS lessens the incentive to patent by requiring a higher standard of intent. As many feared years ago, a specific intent requirement very likely allows a defendant to escape liability through reliance on a competent opinion of counsel. That is what occurred in Manville Sales and while there are good reasons why it should not be so, that case now has to be made in view of DSU Medical. Second, intent to induce, even if proven, does not equate to willfulness. The § 271(b) proof standard is preponderance while the § 284 standard is clear and convincing evidence.
    In 2005-06, the CAFC repeatedly stated that “there appears to be a lack of clarity on the meaning of intent to induce patent infringement.” Golden Blount, Inc. v. Robert H. Peterson Co., 438 F.3d 1354, 1364 (Fed. Cir. 2006); Fuji Photo Film Co. v. Jazz Photo Corp., 394 F.3d 1368, 1377 (Fed. Cir. 2005); MercExchange, L.L.C. v. eBay, Inc., 401 F.3d 1323, 1332 (Fed. Cir. 2005), vacated by 126 S.Ct. 1837 (2006); MEMC Elec. Materials v. Mitsubishi Materials Silicon Corp.,420 F.3d 1369, 1378-80 and n.4 (Fed. Cir. 2005); Insituform Techs., Inc. v. CAT Contracting, Inc., 385 F.3d 1360, 1378 (Fed. Cir. 2004); Mentor H/S, Inc. v. Med. Device Alliance, Inc., 244 F.3d 1365, 1379 (Fed. Cir. 2001). See also Conflicts in Federal Circuit Patent Law Decisions, 11 Fed. Circuit B.J. 723, 762-64 (2001-02); and Patent Law – Active Inducement of Infringement – District Court Holds That Inducement Liability Requires Proof of Intent to Induce Violation of the Law, 115 Harv. L. Rev. 1246 (2002) (discussing Amersham Pharmacia Biotech, Inc. v. Perkin-Elmer Corp., No. C97-04203CRB) 2000 WL 1897300 (N.D.Cal.))
    The uncertainty is rooted in two 1990 Federal Circuit cases. In the earlier case, Hewlett-Packard v. Bausch & Lomb, the court required, at a minimum, “actual intent to cause the acts which constitute the infringement.” Hewlett-Packard Co., 909 F.2d at 1469 (citing Water Techs. Corp. v. Calco, Ltd., 850 F.2d 660, 668 (Fed. Cir. 1988)). This is known as “general intent.” In the second case, Manville Sales Corp. v. Paramount Sys., Inc., the court required “specific intent to encourage another’s infringement.” Manville Sales Corp. v. Paramount Sys., Inc., 917 F.2d 544, 553 (Fed. Cir. 1990) (citing Water Techs. Corp., 850 F.2d at 668, and Hewlett-Packard Corp., 909 F.2d at 1469). The Federal Circuit in Manville Sales reversed the district court’s finding of infringement because the defendants relied in good faith on a competent exculpatory opinion from counsel.
    Early on authors were concerned with the possibility that a good faith belief of non-infringement might shield liability. See Michael N. Rader, Toward a Coherent Law of Inducement to Infringe: Why the Federal Circuit Should Adopt the Hewlett-Packard Standard for Intent under § 271(B), 10 Fed. Circuit B.J. 299, 324 (2000) and Robert O. Bolan and William C. Rooklidge, Imputing Knowledge to Determine Willful Patent Infringement, 24 Am. Intell. Prop. L. Ass’n Q.J. 157, 163 n. 13 (stating that Manville Sales “led to wide speculation that an opinion of counsel may avoid liability for inducement of infringement.”).
    The only difference between a general intent standard and strict liability is that under the general standard inadvertent conduct is excused. See Fromberg, Inc. v. Thornhill, 315 F.2d 407, 411 (5th Cir. 1963) (“inducement has connotations of active steps knowingly taken – knowingly at least in the sense of purposeful, intentional, as distinguished from accidental or inadvertent.”). Thus, general intent is consistent with broad liability so it increases the incentive to patent; and, therefore, specific intent decreases the incentive to patent.

  2. 21

    Good points. The plain language of 271(b) would appear to not require any knowledge of the patent at all. However, in Water Technologies v. Calco, 850 F.2d 660, 668 (Fed. Cir. 1988) the Federal Circuit (citing Chisum) observed that “although section 271(b) does not use the word ‘knowing,’ the case law and legislative history uniformly assert such a requirement.” (Of course, this statement on its own–like many in the DSU opinion and in Manville–is ambiguous as to whether there must be knowledge of the patent or knowledge of the activities induced.)

    In any event, whether knowledge of the patent is required or not, requiring an intent to infringe–and thereby rendering an opinion of counsel relevant to defeating inducement–is a very different thing.

    In contrast, “intent to cause the acts which constitute the infringement” appears to be implicit in the plain language of the statute. It is difficult to see how one would “actively induce” another to make, use, or sell a patented combination without having an intent to cause that making, using, or selling.

  3. 20

    Why not go back to basic statutory construction?

    Under Section 217(a), infringement means to make, use, offer to sell, sell, or import the patented invention. This is (or ought to be) an objective fact. A product infringes if it has elements corrresponding to all the claim limitations. Knowledge and intent are irrelevant.

    35 U.S.C. 271(b)provides, “Whoever actively induces infringement of a patent shall be liable as an infringer.”

    Action/Actively — characterized by action rather than by contemplation or speculation

    Induce — to move by persuasion or influence

    A person induces infringement when he actively (as opposed to passively) persuades or influences the direct infringer to make, use, sell, offer to sell, or import a product which has elements corrresponding to all the claim limitations. Did the accused person/entity actively influence and/or pursuade the direct infringer to make/use/sell the patented invention?

    Knowledge and/or intent by the direct and/or induced infringers goes to willfullness, not liability for infringement.

    The Supreme Court should review this case. It’s a very clean and narrow issue, it was poorly addressed by the Federal Circuit (without amici submissions), and it eliminates induced inringment in all but the most egregious cases.

  4. 19

    As evidence that the opinion is sloppy and that even some readers may believe that knowledge is the same as intent, see the first sentence of the summary of the case provided by BNA’s Patent Trademark and Copyright Journal:

    “Inducement infringement of a patent under 35 U.S.C. §271(b) requires that an alleged infringer be shown to have knowingly induced infringement, not merely knowingly induced the acts that constitute direct infringement…”

    “Knowingly induced infringement” is hopeless ambiguous–and if it means that one must induce infringement with knowledge of the patent, it would appear to be inconsistent with the opinion’s references to “intent to infringe.”

    Similarly, the use of “knowingly induce the acts that constitute direct infringement” appears to confuse knowledge with intent, given that the HP standard is “intent to induce the acts that constitute direct infringement.”

    This provides additional support for the suggestion above about use of more precise terminology, such as is used in the Model Penal Code.

  5. 17

    Still trying to boil this down (possibly a losing proposition, but you can’t blame a boy for trying).

    It seems that:

    Direct infringement may be willful or not willful.

    Indirect infringement by inducement is necessarily willful (under DSU Medical).

    Indirect infringement by contribution may be willful or not.

    So EVERY time that induced infringement is found, enhanced damages may apply.

    How off base am I?

  6. 16

    I agree. The language in the opinion is sloppy and could benefit from the terminology of the Model Penal Code. As I mentioned above, the opinion seems to conflate knowledge and intent.

    Nonetheless, sloppy or not, it is hard to escape from concluding that the opinion is sanctioning “intent to infringe” as the standard and “advice-of-counsel” as a defense to inducement. Page 19 of the slip opinion explains the evidence before the jury, including “letters from U.S. patent counsel advising that the Platypus did not infringe” and testimony from one of the owners of the accused inducer (ITL) “that ITL had not intent to infringe.” The opinion then states: “Thus, on this record, the jury was well within the law to conclude that ITL did not induce JMS to infringe by purposefully and culpably encouraging JMS’s infringement. To the contrary the record contains evidence that ITL did not believe its Platypus infringed. Therefore it had no intent to infringe. Accordingly, the record supports the jury’s verdict based on the evidence showing a lack of the necessary specific intent.” (slip op. at 19).

  7. 15

    When I read this opinion, I do not get the sense that the judges are using terms like “specific intent” with precision. In this sense, I feel that the law of inducement could borrow the terminology of the Model Penal Code, which precisely spells out different levels of intent. This could help clarify exactly what degree of culpability is required of the inducer. For example, even when talking about intent to cause infringement, rather than the acts alleged to constitute infringement, one can draw a distinction between knowledge and purpose. An accused inducer may know that its actions have caused others to directly infringe the patent even though direct infringement was not the purpose of the accused infringer in undertaking those activities. I am not commenting on the substantive law of inducement. I am merely positing that the law does have tools, in particular the Model Penal Code, for clarifying the degree of culpability required for inducement.

  8. 14

    “Perhaps the difference is the policy behind protecting those that sell staple articles with substantial noninfringing uses. I am not so sure that the issue is foreclosed by Aro.”

    Protecting those that sell staple articles with substantial noninfringing uses is precisely the reason that HP imposed the “intent to cause the acts that constitute the infringement” requirement. It is this rule that protects the seller of staples. No further requirement for an “intent to infringe” is required to protect the seller of staples.

    The dovetailing of 271(b) and 271(c) is seen when the HP “intent to cause the acts which constitute the infringement” requirement is applied. When someone sells a component that is not a staple and has NO substantial noninfringing uses, we can all presume that he has an “intent to cause the acts which constitute the infringement.” When the component DOES have substantial noninfringing uses, we cannot presume this intent; it must be separately proved. That is why 271(c) is a special case of 271(b) and why the knowledge-of-the-patent requirement in Aro for 271(c) should be equally applicable to 271(b).

  9. 13

    As was suggested above, induced infringement now includes a willfulness requirement.

    Intent to cause the acts which constitute the infringment should be the rule. One theory for the culpable intent rule is it is unfair to impose liability on someone who didn’t know the acts being induced were infringing.

    This makes no sense, however, since many a direct infringer has been held liable even though he had no knowledge that the patent even existed. Why should one who induces infringement and has actual knowledge of the patent avoid liability by not “intending” to cause infringement. Why reward ignorance? Worse, why encourage willful, fabricated, and/or “reasonable” ignorance? Since the induced infringer must have knowledge of the patent, the intent requirement should be satsified by proving intent to cause the infringing acts, whether or not he knows the infringing acts are infringing.

    Here’s a true scenario in a settled case where this issue was raised, but never finally resolved: The Trademark owner licensed the TM to widget maker and gets a royalty for every widget sold. The TM owner was notified of alleged infringement, but did not tell the licensee. The TM owner specifically approved infringing widget designs, but says he did so only to ensure that the widgets’ quality conformed with the reputation of the TM and that the widgets were aesthetically consistent with other products in the TM owner’s line. While the patented invention was utilitarian, it could be molded and sculpted in different asethetically pleasing forms. Thus, while the invention was utilitarian, the conscious motivation behind using the infringing technology was design considerations rather than functional considerations. The TM owner denied any intent to infringe, arguing that utlitarian aspects of patent were completely irrelevant to its approval of infringing widget designs.

    Does the TM owner get off under the new rule because he did not care about the utilitarian aspects of the invention. Since he approved infringing designs only based on aesthetic considerations, did he not intend infringement of the utilitarian invention? Arguably, there was no culpable intention of inducing infringment. But isn’t this like avoiding infringment by relying on a different use than described in the invention even though it was really an additional use?

    Under the intent to induce acts constituting infringment, liability seems clear. Under the new rule, the result is unclear and the dispute is a factual one complicated by the inherent diffucult of proving someone else’s culpable intent.

  10. 11

    Given the common history of 271(c) and 271(b), it would be a reasonable assumption that whatever knowledge-of-the-patent or intent-to-infringe requirement applied for 271(b) would also apply to 271(c)–and vice versa. Thus, the CAFC’s DSU Medical case would suggest that the intent-to-infringe requirement should now be applicable to 271(c). Except that the Supreme Court has spoken on the issue for purposes of 271(c) and said otherwise.

    In Aro Mfg. Co. v. Convertible Top Co., 377 U.S. 476, 488-490 (1964), the Court held that 271(c) required “a showing that the alleged contributory infringer KNEW that the combination for which his component was especially designed was both patented and infringing.” Significantly, the Court then held that the accused contributor “clearly had such knowledge” because of a letter from the patentee to the accused contributor informing it of the patent and alleging that it was a contributory infringer. The fact that the accused contributor contested its liability all the way through the Supreme Court was irrelevant.

    This is one of the reasons why the “intent to infringe” requirement for 271(b) is wrong. It is inconsistent with the common history of 271(c)/271(b) and the knowledge requirement that is clearly applicable (per Aro) to 271(c).

  11. 10

    Query now whether an opinion-of-counsel could also negate the “minimal intent” (per DSU) required for contributory infringement, which requires that the infringer “know[] the same to be especially made or especially adapted for use in an infringement of such patent.” If one has a opinion-of-counsel that indicates that the product is NOT especially made or especially adapted for use in an infringement, then an argument could be made that the accused infringer did not have the requisite knowledge and/or intent to infringe.

  12. 8

    Funny. They call patent infringement a tort but only award contract damages. En banc that my good friends. En banc that.

  13. 7

    The HP approach did NOT effectively do away with the intent requirement. See the facts in HP itself, in which inducement was not present because of the lack of an “intent to cause the acts which constitute the infringement.”

    Moreover, the HP intent requirement is sufficient to prevent patentees from suing “people who perform[] one step, or encourage[] an act, or just help[] in some way.” A more stringent “intent to infringe” requirement is not required to preclude a finding of inducement by such actors. If, for example, I sell salt to a party who uses it in a patented combination, I am not liable as an inducer under the HP standard unless I manifest an intent to cause that party to combine the salt in the patented manner. If I do manifest such an intent, there is no reason to go further and require a showing that I also intended that the combination be found to infringe.

    The language in Manville is sloppy and unclear. To the extent that the language in Manville means that an inducer must have knowledge/notice of the patent (in addition to an intent to cause the acts which constitute the infringment), that rule is just fine. To the extent the language (and holding) in Manville goes further and makes advice of counsel relevant to rebutting inducement, it is a bad rule.

  14. 6

    The intent to induce requirement serves a very important purpose. Without it, there is no reason for anyone to bring claims for direct infringement. It would be far easier to sue people who performed one step, or encouraged an act, or just helped in some way.

    The old Hewlett-Packard approach, now rejected, effectively did away with the intent requirement, since the only “intent” required was intent to have the product produced. Everyone in an inducement case has that. So, while I think there are very limited circumstances in which intent to infringe should not be required, I think the court was largely right to adopt the Manville Sales approach. In any event, resolving the conflict is a good thing.

    One effect of the decision may be to merge inducement with willfulness — if I intended to cause infringement of the patent, presumably my act was willful and should be eligible for treble damages.

  15. 5

    The opinion does not address the scenario where there is an invalidity opinion. The opinion states that the accused inducer had “obtained letters from U.S. patent counsel advising that [it] did not infringe.”

    Query: If an accused inducer has an opinion so that he does not currently have the required “intent to infringe,” can he have the required “intent to infringe” later? After the district court enters an order on claim construction that contradicts the opinion? After SJ of direct infringement is granted against his customers? Or do we have to wait until after the SJ is affirmed on appeal? Or after cert. is denied? And is an injunction impermissible before that point but permissible afterwards?

    Questions like this begin to expose the folly of the “intent to infringe” requirement.

  16. 4

    I haven’t read the case yet but … does this mean that if the alleged inducer has a reasonable belief (e.g., one based on a well-written legal opinion) that the patent at issue is invalid, then he/she is in the clear?

    Does the case address this invalidity scenerio explicitly?

  17. 3

    Another comment. The court’s opinion seems to conflate knowledge and intent. Knowledge of the patent is one thing; intent to infringe is quite another. In attempting to justify its rule, the opinion seems to equate them. But when only the former is a requirement for inducement, an opinion of counsel is irrelevant except to show that the accused infringer was indeed aware of the patent and the potential for infringement. When the latter is made a requirement for inducement, however, an opinion of counsel becomes a tool not only for avoiding willfulness but liability itself.

    It appears that the en banc court was focused on whether “intent to cause the acts which constitute the infringement” is sufficient. It is not. But that does not mean that the additional requirement must be intent to infringe. Rather, the additional requirement should merely be knowledge of the patent. Intent to cause the acts which constitute the infringement, when coupled with knowledge of the patent, may give rise to an INFERENCE of intent to infringe, but to REQUIRE an intent to infringe is bad law.

  18. 2

    There are several problems with this decision. First, the CAFC’s heavy reliance on Grokster is problematic. Grokster found that the requisite intent for inducement was present; it did not exonerate a defendant for having an opinion of counsel.
    Second, it is bad policy to require intent to infringe for liability for inducement. Consider this (soon-to-be-common?) scenario:
    Claim 1 requires elements A, B, and C in an assembled combination. Company X sells parts A’, B, and C unassembled in a box with instructions on how to put the parts together so as to form the patented combination. Company X learns about the patent. Company X gets an “opinion” from patent counsel that the use of A’ does not satisfy Claim 1’s requirement for A and is not equivalent to A. Company X is sued for infringement. The court decides on summary judgment that A’ does satisfy the requirement for A and that the issue is not even really that close. The consequence of the DSU decision is that Company X may not be liable for inducement, because even though Company X was on notice of the patent and even though Company X was aware that there was a possibility that the combination it encouraged was infringing and even though Company X intended to cause the acts that constitute the direct infringement, Company X did not believe that the combination was infringing.
    Third, the decision is inconsistent with the common history of 271(b) and 271(c). As Hewlett-Packard explains, 271(b) and 271(c) sprang from the same theory of liability. 271(c) was simply a special case of 271(b). (Ironically, Grokster recognizes this in distinguishing Sony.) The knowledge and intent requirements for 271(c) are clear because the Supreme Court has spoken on them in Aro. Under 271(c), “intent to cause the acts which constitute the infringement” is presumed by the fact that the component sold has no substantial noninfringing uses. And 271(c) requires knowledge that the component is especially adapted for use in a patented combination. Aro makes clear that this is satisified by notice that the combination for which the component is intended may potentially be infringing. If an opinion of counsel is relevant to rebut the “relevant intent” under 271(b), then the intent and knowledge requirements for 271(b) are now more stringent than for 271(c).
    Fourth, the en banc court made this ruling without requesting supplemental briefing from any of the bar associations or usual amici on this topic. If they had done so, I think they would have been made aware of the foregoing and would not have been so quick to adopt a formulation that makes advice of counsel relevant. Unfortunately, they did not do so and we are left to pick up the pieces.

  19. 1

    The CAFC has been dodging this issue for years. Usually, they said that the issue of mens rea was moot because the infringer knew about the patent. It’s nice to get this clarified at last. This shows a benefit of the Supreme Court looking over the CAFC’s shoulder.

    DSU shows a clear benefit to getting an opinion of counsel. If counsel says you have no liability, you lack the mens rea of an inducer.

    This also shows why prosecuters should be writing claims that will be directly infringed by a competitor. Does DSU foreshadow a de-emphasis on induced infringement, the way that Festo de-emphasized DoE? This could make for a nice academic article…

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